TRADE NEWS BULLETIN Volume 2 Number 202 Wednesday, November 10, 1993 Headlines: STUDY SAYS NAFTA WILL COST THE U.S. $20 BILLION GORE-PEROT DEBATE GETS PERSONAL, LACKS SUBSTANCE MEXICAN PESO DROPS SIGNIFICANTLY GATT ACCORD COULD RAISE $270 BILLION FOR WORLD ECONOMY ________________________________________________________ NAFTA News Summary ________________________________________________________ STUDY SAYS NAFTA WILL COST THE U.S. $20 BILLION In a new study, the congressional Joint Economic Council (JEC) says the Clinton administration has underestimated the costs of implementing the North American Free Trade Agreemennt by as much as 30 percent, and predicts NAFTA will cost the United States $20.1 billion over the next decade. "No one should vote for NAFTA unless they are prepared to cough up the money needed to make all the promises a reality," said Representative David Obey (D-Wisconsin), JEC chairperson. The study estimates environmental cleanup and infrastructure spending along the U.S.-Mexican border would cost $7.4 billion, dislocated worker assistance would cost $3.9 billion and lost tariff revenues another $8.8 billion. Recent attempts to recover $2.3 billion in lost tariff revenue under NAFTA were met with strong opposition in Congress. Obey said many pro-NAFTA congressional members would later prove "unwilling to appropriate the funds that are necessary to meet NAFTA's true costs." Sources: "NAFTA to Cost U.S. Budget $20 Billion, Study Says," REUTER, November 9, 1993; "JEC Study Warns of $20 Billion 'NAFTA Deficit'," NAFTA NOtes, November 10, 1993. ________________________________________________________ GORE-PEROT DEBATE GETS PERSONAL, LACKS SUBSTANCE Tuesday's highly-publicized debate on NAFTA focused little on the facts and much on hyperbole and personal attacks. When Vice President Al Gore and Texas billionaire Ross Perot did try to address the agreement's impact on the United States and Mexico, they each made a number of exaggerated claims, especially about how the agreement would impact jobs and working conditions. Gore began the debate by arguing NAFTA would benefit U.S. workers. He said that NAFTA's provisions allowing duty-free access to Mexico's consumers would increase Mexican demand for U.S. products and create 200,000 U.S jobs. Gore claimed that U.S. companies would not be lured south of the border by low Mexican wages because they enjoy higher worker productivity in the U.S. Perot said that past U.S. trade deals have cost the U.S. two million jobs and that NAFTA "isn't good for people in either country." He held up photographs of shanty towns near U.S. plants in Mexico to argue that Mexicans working for American companies often work and live in unsanitary conditions. Perot reiterated that he was not opposed to free trade as long as it did not come at the expense of working people. He suggested implementing a "social" tariff to pressure companies operating in Mexico to improve working conditions and pay. Under Perot's plan, the U.S. would impose an import fee on Mexican goods relative to Mexican wages. As wages rose, the tariff would be eliminated. The Clinton administration and Perot have long accused each other of misstating the facts on NAFTA. "Would you even know the truth if you saw it?" Gore asked Perot last night. Earlier, Sharon Holman, a Perot spokesperson, said the White House was attacking Perot personally in a desperate attempt to win support for the accord. "When you can't make arguments on the facts, you resort to name calling," said Holman. "That's what they have left." Even prior to the debate, some anti-NAFTA environmental and labor groups were suggesting that Ralph Nader, House Majority Leader Richard Gephardt or AFL-CIO Secretary-Treasurer Tom Donahue would have been more knowledgeable and appropriate people to debate the White House on NAFTA. Clinton had hoped last night's debate would convince undecided lawmakers to support NAFTA. However, House Whip David Bonior (D-Michigan) claims a majority of Representatives have agreed to vote against the pact. Sources: Bob Davis, "Gore Takes on Perot in Debate Over Trade Pact," WALL STREET JOURNAL, November 10, 1993; John King, "NAFTA," AP, November 9, 1993; Douglas Jehl, "Clinton Seeks to Direct His Campaign for Trade Accord at Working People," NEW YORK TIMES, November 10, 1993; "Gore Says Leading People Behind NAFTA; Perot Says They Can't Sell It," UPI, November 9, 1993; Laurence McQuillan, "Clinton Squirmishes With Perot Before Debate," REUTER, November 9, 1993; Mary Ann Akers, "Democratic Whip Says NAFTA Defeat Is Certain," UPI, November 8, 1993. ________________________________________________________ MEXICAN PESO DROPS SIGNIFICANTLY Unwilling to continue pumping billions of dollars to defend the Mexican currency, Mexico's central bank allowed the peso to tumble over four percent relative to the U.S. dollar prior to yesterday's debate. "The market is very nervous about NAFTA and the Gore-Perot debate," said Antonio Gonzalez of Estrategia Monetaria, an exchange rate house in Mexico City. The central bank allowed Mexican overnight interest rates to climb to 20 percent in hopes of attracting foreign investors back to the peso. Sources: Damian Fraser, "Mexican Peso Under Pressure as U.S. Vote on NAFTA Nears," FINANCIAL TIMES, November 10,1993; Craig Torres, Paul B. Carroll, "Mexico Abandons Its Defense of the Peso; Currency Declines 4.1% Against Dollar," WALL STREET JOURNAL, November 10, 1993. ________________________________________________________ GATT News Summary ________________________________________________________ GATT ACCORD COULD RAISE $270 BILLION FOR WORLD ECONOMY A completed GATT accord could unlock more than $270 billion in annual revenues by the year 2002, according to a report released yesterday by the Organization for Economic Co-operation (OECD). The earnings would reportedly result from reduced import tariffs on all goods and non-tariff barriers to farm trade, and a cut in non-tariff blocks on industrial goods. OECD Secretary-General Jean Claude-Paye said the report was produced to remind world leaders why a GATT conclusion was important to the global economy. An earlier report produced jointly by the World Bank and OECD estimated revenue gains under GATT at $213 billion. Sources: Alastair Macdonald, "OECD Calls for Trade Deal to Unlock $274 Billion," REUTER, November 9, 1993; David Buchan, "GATT Deal May Enrich World by $270 Billion," FINANCIAL TIMES, November 10, 1993. ________________________________________________________ Editors: Gigi DiGiacomo and Kai Mander The Institute for Agriculture and Trade Policy (IATP) 1313 Fifth Street SE, Suite #303, Minneapolis, MN 55414-1546 USA Telephone:(612)379-5980 Fax:(612)379-5982 E-Mail:kmander@igc.apc.org ________________________________________________________